The News Crisis: What Google Can Do

“How Google Can Help Newspapers,” ran the benign-sounding headline atop an Op-Ed column by Google CEO Eric Schmidt in the December 1 Wall Street Journal. In it, Schmidt sought to rebut claims that, as Les Hinton, the CEO of Dow Jones, has put it, Google is a “digital vampire” that is “sucking the blood” out of the news business. Quite to the contrary, Schmidt argued, Google wants to turn that business around. He wasn’t very convincing. In fact, his article shows how inept Google has been in responding to its critics. I’d like to suggest a better way.

Schmidt acknowledges the severity of the crisis in the news industry and the trouble that it portends for the country as a whole. But, he insists, Google cannot be held responsible for this state of affairs. On the contrary, he maintains, it’s been a great boon to newspapers, sending them a billion clicks a month through Google News and over three billion more through Google Search and other services. Meanwhile, Google is developing Fast Flip, a technology designed to make it possible to flip through an online magazine or newspaper as if it were the real thing. News organizations that participate, Schmidt wrote, “will receive the majority of the revenue generated by the display ads shown beside stories.” By 2015, he speculated, there will exist compact hand devices able to send users news that’s so finely tailored to their individual tastes and interests that they will be willing to pay for it.

This argument is unlikely to placate publishers like the Journal’s own Rupert Murdoch, whose News Corporation recently began talks with Microsoft about striking an exclusive deal with its Bing search engine, one that would remove the Wall Street Journal and other Murdoch papers from Google searches. To publishers, all the talk about innovations like Fast Flip seems an infuriating distraction from the hard-core realities afflicting the industry.

A more revealing glimpse into Schmidt’s thinking is offered in a long interview
he recently gave to Danny Sullivan, a blogger who covers the world of search engines. Schmidt expressed deep concern about the crisis in American newsgathering, singling out the decline of investigative journalism:

The question that journalists inevitably ask Google, Schmidt went on, “is, okay then, why don’t you just write us a large check?” The problem, he said,

is that just transferring money from an area where we’re making a lot of money to an area where we’re making little money does not solve the problem for the long term. You’re fundamentally better off building the new product that is profitable and growing - again with the news, with magazines and so forth. It’s better for everyone. Because ultimately a subsidy model is a temporary solution. It’s not a long-term solution.

On that point, I think Schmidt is right. The losses that newspapers are suffering are so huge that no entity—short of perhaps the government, as I argued in a previous post—is in a position to make them up. What does seem urgent—and doable—is supporting the development of the “new product” Schmidt refers to (though, needless to say, he expressed no interest during the interview of materially doing so). There are currently hundreds of promising new news ventures out there: reporting sites that cover everything from an entire state to individual city blocks; investigative start-ups ranging from the giant to the fledgling; bloggers posting from every corner of the globe.

Almost all of these desperately need seed money. Yet only a handful of foundations currently support initiatives of this kind. The largest, the John S. and James L. Knight Foundation, has contributed about $100 million to new journalism ventures over the last three years. Eric Newton, a vice president at the foundation, says that, given the many worthy projects out there, Knight could give away ten times that amount if the funds were available.

Google, with a current stock value in excess of $180 billion and revenues of $21.8 billion in 2008, would seem in an ideal position to provide such funds. (Co-founder Sergey Brin’s personal fortune is estimated at $16 billion.) Moreover, some other Internet giants have already begun to invest in new journalism ventures. The Omidyar Network, created by eBay founder Pierre Omidyar and his wife, Pam, funds social media projects like Digg and FM Publishing, as well as the Sunlight Foundation, which promotes transparency in government. And Yahoo has given Stanford University $1 million to underwrite international journalism fellows. Google, on the other hand, has been conspicuously missing from such efforts; while it has donated some $100 million through its philanthropic arm, google.org, since 2006, none of it has gone to support journalism.

I propose that Google set up a Journalism Innovators’ Fund with an initial annual budget of $100 million—less than 0.5 percent of the more than $20 billion it takes in annually. The fund would seek not to subsidize existing news operations but to support creative ideas and new programs aimed at reinventing the news as Schmidt suggests. It would support start-ups and fledgling enterprises engaged in investigation, international reporting, policy analysis, blogging, and other forms of probing and provocative reporting and commentary undertaken by the independent journalists who, given the severe retrenchment taking place at traditional organizations, are making up an ever-larger part of the field. More and more journalists are becoming entrepreneurs. Entrepreneurs need start-up capital, and who better to provide it than Google, itself a product of, and tribute to, the entrepreneurial spirit?

But the Innovators’ Fund would not be restricted to independent operators. It would also be open to ideas from established news organizations aimed at helping them adapt to the Internet. Newspaper Web sites are currently home to some of the most creative digital experiments out there, and an outside source of support could help incubate them. Earlier this year, for instance, The New York Times and ProPublica jointly won a two-year, $719,500 grant from the Knight Foundation to develop Document Cloud, a data-archiving technique aimed at making the huge quantities of information contained in government, corporate, and other kinds of documents easy to search and analyze. This typifies the new forms of collaboration taking place between old and new media; Google could play a key part in fostering them.

Google has not only the resources but also the moral responsibility to provide such help. More than any other institution, it has unleashed the creative destruction that is transforming the news industry. Having built its empire in part through the distribution of free news content over the Internet, it’s time for it to give back a small portion of its vast earnings to help usher in the new era of digital news. Doing so would be good not only for journalism but also for Google itself, helping to restore its image as a public-spirited innovator rather than a blood-sucking predator.

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